From Patsy and Siobhan to data geek: the transformation of PR
Of all the marcomms disciplines disrupted by the rise of the internet, the 'dark art' of public relations has perhaps been transformed the most. It used to be a reasonably simple business – push and pull: it was either crisis management, or writing a press release or organising an event and touting them to the media, hoping there would be some take-up.
Jessica Hynes as Siobhan Sharpe in Twenty Twelve
But with the rise of social media and a permanently interconnected world, it has been transformed into something more nuanced. Push and pull of messages still play a part of course, but public relations is also about influencing, being there and, perhaps most interestingly, about listening and responding. A senior marketer at Coke said earlier this week that silence was not an option in an always-switched on world; I’d concur 100 per cent with that, but I’d add that deafness and blindness are not options either. Eyes and ears need to be permanently switched on as well.
Which is why the business of public relations is these days closer to the Facebook film 'the Social Network' than it is to 'Ab Fab' or the airheaded ineptitude of PR consultant Siobhan Sharpe, as so memorably portrayed by Jessica Hynes in 'Twenty Twelve'. Always the most professionalised of marketing communications disciplines, PR is now as much a science as an art, almost as reliant on software, market research, monitoring and data analysis as it is on contacts, charm and a great idea.
Which is why WPP’s market research arm Kantar buying a majority stake in media monitoring business Precise Media last week makes perfect sense. Precise is headquartered in London and has offices in New York and works for 2,500-plus customers including large and small companies, PR agencies and public sector bodies. It helps clients and their agencies listen into what’s being said about them on a variety of media, from newspapers and TV, via the web through to Twitter and other social sites.
It uses some rather sophisticated software to sift through up to 75 million pieces of digital content a month, and then provides summaries to its customers, including HSBC and Tesco. The company, which employs around 430 people in London and New York, isn’t just a digital press-cutting service, however. It also provides analysis of whether the coverage is positive, negative or indifferent, and how a brand is performing relative to its competitors.
The value of the transaction was not disclosed, but WPP said that Precise generated £28.9m in revenues for the year ending 30 September 2013, and analysts valued the business at about £70m.
Kantar is actually the largest part of WPP, and demonstrates how much the marcomms business is changing – most people, if asked to name the biggest business within Sir Martin Sorrell’s group would probably plump for one of the big network agencies, like O&M, JWT, Grey or Y&R. Taking control of Precise comes after a number of smaller acquisitions over the past two years to strengthen its media monitoring offer: these include social TV analytics company The Data Republic in April, Singapore-based media monitoring service Fisheye Analytics in December 2013 and French media monitoring service Press Index back in 2012.
The decision to buy into Precise, which was founded in 1996, was made during an active period in PR services mergers and acquisitions. The agency (or should we be calling it a service?) has done very well for its previous owner, private equity firm Phoenix, which bought the business for £42m in 2006 from private equity group 3i. The deal is thought to be around eight times 2014 forward earnings, which on the face of it is a fair multiple.
During the first seven years of Phoenix’s ownership, Precise’s revenues grew by more than 70 per cent, from £17m to £29m by September last year and we assume 2014 would be posting another solid year.
More growth is definitely possible – in a wired, social world, the number of channels is growing exponentially, and the need for brands, agencies and businesses to listen out for, and respond to, thousands of simultaneous conversations becomes more acute, and thus established monitoring services will become ever more in demand.
And secondly, the sale of Precise creates a premium around the remaining independent business operating in the same field. Rivals Vocus and Cision have recently been bought by the same private equity company (US firm GTCR) and are expected to be combined, while Gorkana, the last remaining independent monitoring/database agency of significant size, has been reported to be up for sale.
Gorkana was acquired by press cutting agency Durrants for less than £25m in 2010 which led to the enlarged group being renamed Gorkana. The PR and media database business is backed by private equity firm Exponent which supported a management buyout in 2000.
It is strongly rumoured that Exponent is seeking a price tag of around £200m for Gorkana, despite it having earnings of only £15m to £16m. A strategic player is the most likely buyer for the business because of potential synergy savings. UK publishing and events group UBM or Germany’s Unicepta could be potential buyers, according to sources. Another possible buyer could be the privately-owned international monitoring service Meltwater News.
The Precise acquisition isn’t the only bit of business Kantar has been doing recently. Earlier this week its wholly-owned operating company Millward Brown, a “global leader in brand, media and communications research”, bought (for an undisclosed sum) EffectiveBrands Holdings BV, one of the world's leading marketing strategy consulting firms.
Founded in 2001 by Marc de Swaan Arons and Frank van den Driest, the company's unaudited revenues for the year ended 31 March 2014 were approximately €14.1m. EffectiveBrands is headquartered in Amsterdam with offices in London, New York, Singapore and Tokyo and employs about 65 people and its client book includes such blue-chips as Pernod Ricard, Virgin, Barclays, Unilever and PepsiCo.
Millward Brown (which owns the famous BrandZ brand valuation database) will combine EffectiveBrands with Millward Brown Optimor, its strategy consulting unit, to form Millward Brown Vermeer. This new entity will aim to analyse the 'why, what and how of marketing' to drive brands’ business growth. Marketing Capability as an offering bridges the gap between agencies acting on behalf of global corporates and enabling in-house marketers to develop and augment brands themselves. As an offering, it is far more in the management consultancy sphere than the agency world and thus I can see the link with Millward Brown – albeit I would have thought that other WPP group companies, such as Added Value, may have offered more synergies.
This latest deal comes hot on the heels of Millward Brown’s acquisition last month of Daedalus, one of Romania’s biggest market research agencies. It would certainly appear WPP continues to be very actively growing its Insight discipline.
Tony Walford is a partner at Green Square, corporate finance advisors to the media and marketing sector